Indian hotel chains take to asset-light model for growth

Indian hotel chains take to asset-light model for growth
08/06/2018 , by , in News/Views

The asset-light model is steadily gaining prevalence in India’s hotel industry, with domestic chains increasingly considering adopting the management approach in keeping with the strategies employed by major global groups like Marriott and Accor.

In February, Taj unveiled its new five-year strategy with chief executive Puneet Chhatwal stating that 60% of its assets will not be owned by the company by 2022. Consultants said all legacy hotel companies have gradually changed their growth models from asset heavy to asset light.

In April this year, Marriott trumped Taj to become the biggest hotel chain in India in terms of the number of rooms, after launching its 100th hotel in Bengaluru. Debt-laden Leela venture has also had to resort to a management contract approach for its upcoming hotels.

Global Hotel chains have been steadily gaining a strong foothold in India through hotels under management contracts. Globally, AccorHotels, Europe’s largest chain in terms of the number of rooms, sold its majority stake in its real estate arm in March to a clutch of investors including sovereign wealth funds valuing the entire business at 6.25 billion euros.

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